March 28, 2008

After resisting subscription services out of fear they would weaken CD sales, music companies are considering the idea in an attempt to reverse plummeting sales and unabated illegal downloading of music from the Internet.

[...] Music executives say discussions are in the early stages and face several hurdles. Some consumers prefer to own music. Others might balk at yet another charge on their monthly Internet bill.

“If a music surcharge is mandatory, consumers are going to resist,” said Russ Crupnick, senior analyst for NPD Entertainment, a market research firm.

Warner hired former Geffen Music executive Jim Griffin as a consultant several months ago to help plot the label’s digital future. Griffin could not be reached for comment.

But he told Portfolio.com that “today, it has become purely voluntary to pay for music. . . . If I tell you to go listen to this band, you could pay, or you might not. It’s pretty much up to you. So the music business has become a big tip jar.”

It is a scenario rarely seen in todays technology market: Cellphone customers wander into any store, pick any device from a shelf, and connect it to any wireless network - one as open as the Internet.

But spurred by growing demand and a federal airwaves auction that closed last week, the major wireless carriers are stepping away from a model in which each cellphone is controlled by a single company that sells customers a device locked to their network, demands a lengthy contract, and limits the phones features.

[...] “We believe that as the two great megatrends of mobility and the Internet come together, the next wave of growth will come from a whole new generation of devices, applications, and services,” said Ivan Seidenberg, chief executive of Verizon Communications Inc., which owns 55 percent of Verizon Wireless. “No single company - whether you’re a carrier, a manufacturer, a software company, or anybody else - will be able to envision all these uses or meet all the needs on their own.”

Not to be outdone, AT&T launched a website the day before the conference, emphasizing its open network.